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The Employment Appeal Tribunal (EAT) has provided important clarification on when an employer’s duty to carry out collective redundancy consultation arises under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.
The decision, in Micro Focus Ltd v Mildenhall, offers valuable guidance for employers managing restructuring exercises and for employees seeking to understand their consultation rights.
Background to the Case
Section 188 requires employers to consult appropriate employee representatives where they are proposing to dismiss 20 or more employees as redundant at one establishment within a 90-day period.
In this case, an employee of an international IT company brought claims in the Employment Tribunal (ET) for:
- unfair dismissal; and
- a protective award for failure to carry out collective redundancy consultation.
The ET concluded that the employer had been proposing collective redundancies and that its UK operations amounted to a single establishment. It also relied on EU case law to suggest that employers may need to look both forwards and backwards when assessing whether the numerical threshold for consultation had been met.
On that basis, the ET found the employer in breach of Section 188 and awarded the maximum 90-day protective award, alongside upholding the unfair dismissal claim.
The Appeal to the Employment Appeal Tribunal
The employer appealed, arguing that the ET had misunderstood when the duty to consult arises.
The EAT agreed in part. It held that the ET had misinterpreted the EU decision in UQ v Marclean Technologies and had placed too much emphasis on retrospective analysis of redundancies. The correct focus under Section 188 is whether, at a given point in time, the employer is proposing collective redundancies in the future, not whether a series of earlier decisions cumulatively reach the threshold.
The EAT also clarified that the ET had erred in considering whether the company was the “de facto employer”. Instead, the proper test is whether there is a contractual employment relationship between the employer and the employees proposed to be dismissed.
Protective Award and Unfair Dismissal Findings
Although the EAT overturned the ET’s conclusion that the duty to consult had definitely arisen, it did not disturb the ET’s approach to the protective award. The ET had been entitled to reject the employer’s claim that it genuinely believed consultation was not required, particularly as no evidence supported that belief.
The EAT also upheld the unfair dismissal finding. The employer had failed to consider pooling options properly, and the redundancy decision had been pre-determined, depriving the employee of a fair opportunity to respond.
What Happens Next?
The question of whether the employer breached Section 188 has been remitted to the same Employment Tribunal for reconsideration. If a breach is ultimately found, the ET may reassess the level of any protective award.
❓ Key Questions & Answers: Collective Redundancy Consultation
- When does the duty to consult under Section 188 arise?
When an employer is proposing, at a particular point in time, to dismiss 20 or more employees as redundant at one establishment within 90 days.
- Do employers need to look backwards at earlier redundancies?
Not automatically. This case confirms that the duty focuses on future proposals, not a rolling aggregation of past decisions.
- Does EU case law change the UK test?
No. The EAT confirmed that Marclean should not be read as altering the meaning of “proposing” under Section 188.
- Can an employer rely on a genuine belief that consultation was not required?
Only if that belief is supported by evidence. A bare assertion will not necessarily reduce a protective award.
- What is a protective award?
A financial award of up to 90 days’ gross pay per affected employee, intended to penalise failures to consult.
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